Microsoft is reportedly preparing for another round of workforce reductions in July 2025, adding to the series of layoffs that have occurred throughout the year. This follows a significant layoff in May 2025, where the company cut approximately 6,000 jobs, representing about 3% of its global workforce. The new cuts are expected to affect thousands more employees, with the sales department and employees outside of the sales teams being heavily impacted. The announcement is expected to be formalized in early July.
These layoffs come as Microsoft is making substantial investments in artificial intelligence (AI). In fiscal year 2025, Microsoft is on track to invest approximately $80 billion in building out AI-enabled data centers to train AI models and deploy AI and cloud-based applications around the world. More than half of this investment will be in the United States, underscoring the company's commitment to the American economy and its confidence in the country's technological ecosystem. The tech giant, along with Meta, Amazon, and Alphabet, is set to spend a record $320 billion on AI and data centers in 2025, a significant increase from the $230 billion spent in 2024.
The job cuts appear to be a part of a broader restructuring effort aimed at aligning the company's resources with its strategic priorities in AI. While Microsoft has not explicitly stated that it intends to replace human jobs with AI, some reports suggest that terminated employees were involved in using AI tools or had AI in their job titles. This aligns with the trend observed in the tech industry, where companies are increasingly adopting AI to automate tasks and improve efficiency.
Microsoft's commitment to AI also extends to training and skilling programs. The company aims to train 2.5 million American students, workers, and community members with AI skills in 2025, with the goal of enabling them to secure new jobs, pursue different careers, and establish new businesses. This initiative reflects the company's belief that widespread AI adoption requires a skilled workforce capable of leveraging the technology's potential.
However, the layoffs have raised concerns among employees and industry experts. The decision to cut jobs, even among senior leaders in AI, has sparked questions about the future of AI roles within the company. Some worry that the rapid adoption of AI could lead to a decrease in job opportunities in certain sectors. One former Microsoft employee described the situation as "a horrible game of musical chairs" with "fewer and fewer chairs for people who are in these industries overall."
Despite the concerns, Microsoft maintains that it is committed to strategic growth and is evaluating business priorities to align with the right opportunities. The company has stated that teams evaluate business priorities and ensure they are aligning to the right opportunities for strategic growth. Following the July restructuring, Microsoft plans to continue with smaller-scale, performance-based layoffs, but does not anticipate additional large-scale workforce reductions of the same magnitude.
